Wednesday, April 4, 2012

Looking at a recent article on US/China rivalry

The relationship between China and America has been characterized by many as complex. Even with the bitter partisanship in Washington, most democrats and republicans seem to have no problem looking at China as a threat and using China as a scapegoat for economic problems in America. I think it's also quite clear that the US military views China as its most likely foe in the future regardless of how many confidence building measures are proposed. Of course, the Chinese government officially try to avoid overly confrontational language, even though PLA generals and Global Time often voice strong opposition to America.

Recently, I read this article where it talks about how people in the Chinese ruling elite really feel about America. Here are a few really interesting snippet.

The senior leadership of the Chinese government increasingly views the competition between the United States and China as a zero-sum game, with China the likely long-range winner if the American economy and domestic political system continue to stumble

China views the United States as a declining power, but at the same time believes that Washington is trying to fight back to undermine, and even disrupt, the economic and military growth that point to China’s becoming the world’s most powerful country

the authors say the level of strategic distrust between the two countries has become so corrosive that if not corrected the countries risk becoming open antagonists.

In contrast, China has mounting self-confidence in its own economic and military strides, particularly the closing power gap since the start of the Iraq war. In 2003, he argues, America’s gross domestic product was eight times as large as China’s, but today it is less than three times larger.

the Chinese leadership, backed by the domestic news media and the education system, believes that China’s turn in the world has arrived, and that it is the United States that is “on the wrong side of history.”

China’s financial successes, starting with weathering the 1998 Asian financial crisis and the 2008 global financial crisis, the execution of events like the Beijing Olympics in 2008 and the Shanghai Expo in 2010, contrast with America’s “alarming” deficit, sluggish economic recovery and polarized domestic politics

None of these above views are surprising, since I've read all of these view points from different sources and at least partially agree with most of the above points. It's particularly hard to address all of them, so I hope I don't go completely off track with my thoughts here. I think this is an extremely important topic. I know this can be a sensitive topic and most of my views are probably not popular, but I can only state how I see things. I do apologize in advance if I offend anyone.

The first question is whether or not US is a declining power. I think if we compare where US is right now to where it was at the collapse of Soviet Union, there is no question that it has declined. More than anything else, I think the two prolonged wars in Middle East that are operated completely on debts have really accelerated the American decline. In the coming years, I think it will decline further when compared against the rising economies of China, India and Brazil. In several areas like financial prowess and manufacturing power, China has already caught up or surpassed America. In other areas like military, higher education/research and cultural influence, it's hard to see when China will ever catch up to America. The areas that China will likely to gain ground on America in the coming years is the overall economy and political influence around the world. Another thing to consider is that American allies in the Western world are also on the decline due to debts issues, decreasing productivity and population decline. So if we just look at the current economic and finance situation in America and the rest of the Western world, it would seem like China (and other rising powers like India and Brazil) are poised to take over.

The second question is whether or not the China is actually ready to take over from America. I think the answer to this is no. A lot of times, we are blinded by the 30+ years of economic growth in China and fail to see the problems in the country. The problems that China and America face are quite different. America is facing huge debts problems from years of excessive public and private sector spending. American Federal, state and municipal governments faces much financial problem in the coming years related to the runaway health care, social security and public sector pension costs. China's government is not burdened by these excessive public sector spending problems, but it faces a lot more social problems. I have always that pollution and corruption are China's biggest problems. Now, I have to add two more to the list: the extreme male/female population imbalance and the increasingly unsustainable wealth gap between the rich and the poor. The first problem results in a lot of frustrated single men, large prostitution industry and escalating home prices (from women demanding owning home before marriage), Having a lot of frustrated single men have historically been a really bad social situation (more conflict and wars). The second problem is exaggerated by the absolute wastefulness of many rich Chinese people and how these people made their money in the first place. These people make Wall Street bankers look like Mother Theresa's. So even though China has gotten a lot wealthier, there are serious social tension within the country toward the wealthy and the corrupted officials that are further exaggerated by frustration over male/female imbalance, lack of free speech, inflation and very polluted environment. The Chinese government really has more things to worry about at home. On top of all of this, China's banks and local governments are also grappling with debt problems from all of the recent economically unfeasible public sector projects. I think the Western bank and public sector debt problems are larger, but China's debt problems are ready to explode too. The Chinese leadership would be making a huge mistake if it overestimates itself and underestimates America.

The third question is whether or not America is really trying to hold back China. I think the answer to this is yes. China's goal is to create a multi-polar world where it assumes regional hegemony. American goal is to remain as the sole superpower in a unipolar world where no other country establishes local hegemony. Clearly, the two countries have different political goals and will clash against each other. Currently, this is playing out in South East Asia where China is trying to achieve regional hegemony, but America has managed to inject itself back into the region and prevent that. I think this will continue to play out in the future as long as the two nations have such polar opposite political vision. I think that once India grows powerful enough, it will also clash with America on the very same issues. Just think about what would happen if India becomes confident enough to assert its own view points on countries like Iran, Afghanistan and demand greater say in energy coming out of the Middle East.

The fourth question is whether or not this is a zero sum game. I think the answer is yes and no. The two countries can obviously work together to address a lot of the security threats that we face today. At the same time, China cannot achieve regional hegemony with America around nor can it be part of a multi-polar world without America loosing influence. There is also the scenario where both country looses influence if the social problems in China blows up and the debts problems in America blows up. We are already seeing EU declining significantly in the recent years due to its financial and debts problems. The other part of the zero sum game is economy. In the near term, the two countries need each other to have continued economic growth. If one country suffers a large slow down, it will have large affect on the other country. As I've said in the past, a trade war would have crippling effects on both countries. In the long term, I think it is somewhat of a zero sum game. The world has finite natural resources and energy sources. As we approach peak oil, the cost of energy will simply grow higher and higher. If all of the countries are battling for the same finite resources to keep economy going, then they will clearly be in competition with each other. We already see some of that with China signing deals around the world for oil reserves and mining rights to different natural resources. This is another area where India will also really be competing with China and America on. Just imagine the energy and natural resource demand of China and India if they all seek to live the same quality of life as Americans. As the world population expands, we will also be battling over basic necessities like water and food.

In the end of the day, I think both countries face a lot of challenges ahead. In their current path, China and America clearly has confrontation world view, but that may change in the future. If China goes through a period of social instability or economic meltdown, who knows how its foreign policy will change. Looking at its 5000 years of history, China has always been a country that concentrated on itself. If America goes through anything close to Greece style debts crisis, I think that would have to cutback on its role in the world affairs. I think India will be a very large player in the future as its population and economy continues to grow. I think Brazil will also have a very strong voice in the future, whereas countries like Japan, UK and the rest of EU will continue to be in decline. In 15 years, we won't just be talking about a G2 kind of world. With energy and natural resources become increasingly scarce, we could see conflicts over them in the future. More than anything, I think that's where I see the highest possibility of a major future conflict.

33 comments:

It's true. I hear some absolutely horrid stories of just the wealth gap in big cities like Beijing and Shanghai. The prices in Beijing right now are actually higher than prices in New York, which is scary when you consider where the income level is at.

First of all China is still a developing country and its current level of development is where Japan and the US was in the 1970's. China only opened up in the 1970's to capitalism and it has a long way to go yet. However the sheer size of China's population, 4 times that of the US, means that China will eventually become the worlds largest economy. The IMF predicts this will happen sometime in 2018-2020. When this happens, things will then get interesting. Usually countries with the larger economy will have a larger national budget and this always translates into a larger military budget. Military spending is always a % of the total budget and China currently spends 2% which is the standard around the world. Of course if the US turns up the pressure on China and the Chinese feel threatened, they may increase the amount they spend on the military. Any long term US strategy to contain China could result in a China with the worlds largest military budget. Will this bring stability to the region? There are claims that the US is trying to slow down China's ascendancy in the hope that China will collapse like the Soviet Union. This analysis is flawed as China's economy is very much capitalist in nature and it is unlikely to collapse like the Soviet Union which had a dysfunctional command economy.All said.......i am of the view that China and the US will never come into conflict as they are too closely linked economically and both have enough nuclear weapons to deter each other. China is also a global trading nation and any conflict will hurt its economy and internal stability. Yes, there will be rivalry between the two powers that will last for decades. Be prepared for it. India will also have a economy the size of the US by 2050.

It is the IQ and human race that determine the producitity of a nation not numbers.

Chinese's IQ are much higher than indians. 105 vs 83 !

Chinese are a unified race for over 2000 years, and india was NEVER unified. India as a nation was slapped together by Britain !

Also, indians dont know how to start a reveloution this means their ability to perform assembly is viturally ZERO. Chinese on the other hand is the master of reveloutions, just take a look at the Chinese history.

Now answer this question !!!

India was formed in 1947, China in 1949. When india was formed in 1947 it had the finniest infrastural in Asia build by Britain, China has NOTHING ! Also, india's GDP is twice that of China. Now look at it. China's infrastructal is 40 years ahead of india and Chinese education is far better than india's, also China's GDP nominial is now 4 times that of india, its GDP PPP is 3 times that of india. What happen ??

Jiang has some anger issues and that comes out every time I say something that's not pro Chinese government. When I talk about problems with China, it's apparently because I'm Christian.

Now, China has some huge social problems to deal with. I don't think the military spending in China is that bad. But issues like male/female discrepancy, wealth gap, corruption and pollution are not going to go away.

As for Chinese economy, it's headed for trouble for sure. It can't keep growing at the current pace unless it dramatically increases energy efficiency, because there just isn't enough oil, gas, coal in the world to keep China growing at its current pace unless it becomes a lot more efficient. As for economy crashing, that will happen to any capitalistic economy. You get boom and bust. If you try to prevent bust, you will just end up delaying it and getting into bigger trouble. You are seeing that in most of Western world now.

I dont hate Christians that are white but only Chinese Christrians, becase they are fucked up !

As for the Chinese goverment, I too think that it has pros and cons. I know that it can do better, but I think it did pretty well.

Now for the social problems:

1. The male to femal problem is NOT that bad, as China gets rich it can always import women from other countries.

2. Pollution is a problem is some area but not the entire country, IN FACT, air quality and water quality has improved greatly in my province, Sichuan for example has nice air and water now, at least compare with the past !! Feng is a Christian MOTHER FUCKER and that is why he only says bad things !

3. The energy problem is the main problem. There are not enough oil and coal, true. However, the west will collapse even futher and the oil price will come down again, trust me !! China will gain more time to develope alternatives such as hydro and nuclear !! Do you know that China is actually ahead in fusion technology research ? As for efficiency, China is more efficient than the USA. For example, USA invented nuclear fission. But now it is NOT the leader, France is far ahead. France's 80% engergy is by nuclear fission compare with just 18% in the US !! China is building so many nuclear power plants right now by 2020, 20% will be nuclear, and 2030 35% !! You see China is doing its best to solve this problem !!

4. Corruption is NOT a problem !!! India is democracy yet it is so backward and ill efficient compare with China, how do you explain that? A country's competetiveness has nothing to do with corruptions or its political system let it be democracy or communist !! It has everything to do with the nation's average IQ, unity, culture, and infractruate !! China is going to be just as rich as the west. This does NOT mean that it will reach the national average income of the west. But as China continue to grow and getting more and more powerful. The west will get weaker and weaker, poorer and poorer.

Jiang, how many bloggers would allow you to be this rude online? I'm trying to help you. There is really no reason you can't have a debate without going crazy.

A couple of things:1) I don't support Tibet independence, since it would be horrible for China's security. and I don't remember saying anything about Obama helping Tibet gain independence.2) Freedom of movement is a right. You don't need to stay in any place. I and anyone else should move to which ever place which is most suitable for that person. Singapore is a good place, but a lot of other places are good too.3) If you think China is all good and have no social problems, you should go back there and talk to some of the locals. There is nothing wrong with looking at problems as long as you are honest about it. What's wrong with China going through an economic hard time. In capitalism, you always have boom and bust period. There were clearly a lot of bad investments and over leveraging going on China that need to be cleared up.4) I'm trying to help you here. I used to get angry at everything that was negative about China too, but now I realize that some criticisms are legitimate and others are not. So learning more and being open minded is the way to go.

I must say I admire your patience Feng, not many people would be that nice after reading such schizofrenic words.

Being a Portuguese always made me curious about China and proud of our commom history, and the pace at which China is developing is just incredible. No country is perfect, and China also has it's problems. The thing that I believe most worrisome is the increasing agressiveness towards its neighbours, it may end up isolating China in its own region. If there is something truly good over the last fifty years in Europe, I must say it is the peace that finally reached our continent after so many centuries of protracted wars for territory.

@Ricardo Silva, don't be too gullible least you become another pawn of those pursuing their anti-China agenda. Pretty much all of those Western reported Chinese aggressions on the high seas are manufactured incidents to draw in China's coast guard or navy in disputed waters. They are "never" reported this way. Instead, they are one-sided reported as China's encroachment on weak neighbors, EVEN THOUGH they are disputed territory. Interesting that you automatically assumed the former, no? ;)

@Ricardo Silva, don't be too gullible least you become another pawn of those pursuing their anti-China agenda. Pretty much all of those Western reported Chinese aggressions on the high seas are manufactured incidents to draw in China's coast guard or navy in disputed waters. They are "never" reported this way. Instead, they are one-sided reported as China's encroachment on weak neighbors, EVEN THOUGH they are disputed territory. Interesting that you automatically assumed the former, no? ;)

So, in your opinion. Vietnamese, South Korean, Philippino, Japanese (among others) are all involved in a big conspiracy against China, and China is being naive and pulled into what looks like agression, but in reality China is always the victim?That pretty much sounds a Chinese version of the one-sided reported western view. Personally, I always believe that there are two versions, and that truth is somewhere in the middle.

Whenever there is oil, there are problems. Just look at the Middle East. Those waters are being disputed by all the countries in the vicinity because of all those minerals and oil beneath the waves, and inevitably there are clashes. Sometimes provoked others just the result of the building tension. But one thing is for sure, people from South Korea, Japan, Vietnam,... are increasingly looking to China with fear, and fear is the first step towards hate. It is vital for everybody in the region to adress their issues in a peaceful manner, otherwise things can get uggly.

@Ricardo Silva,You should never assume Vietnam, South Korea, Philippines and Japan are innocent and helpless, particular the Japanese.

Japanese has never shown remorse the war crimes they committed in WWII and before. Japanese threw out the slave labour, comfort women, biochemical experiment victims, etc. court cases looking for redressing the injustice the Japanese committed against them.

Besides Japan has most lethal weapons in Asia, it has tens of Aegis class destroyers and AIP submarines, multiple flattops, hundreds of advanced jet fighters and intelligence gathering planes. Just in this year Japan has already launched 2 destroyers, one flattop and one submarine. Japanese mothballed their warships in nearly mint condition after a short period of usage. Japan also has more and bigger heavily armed coast guard ships than anybody in Asia.

Japan is rearming itself at an alarming speed under the radar screen because the western media’s selective reporting. “China Threat” was a creation of Japanese too. You should never be fooled by the Japanese because it claimed it has a pacifist constitution.

@John,You're right, Japan never fully assumed their crimes, not in the way the germans did with the holocaust. They also killed portuguese in Timor and I never heard any appologise or remorse on that.

I don't assume that one is innocent or guilty, i'm not taking sides here. The thing is, when one looks at what is developing in this region, it looks like the beginning of an arms race and a new cold war, and one that can heat up very quickly. History is a great teacher, but somehow we forget it over and over again. To me, settling the disputs in the China Sea should be a top priority for these countries, and everybody should accept that it's impossible to get all it wants.

When Hitler started murdering Jewish people in WW2, many Jews did escape from Germany before the killing started because they read the ‘Early Signs’. In fact so many tried migrating that the Nazi regime imposed huge ‘fees’ on Jews trying to flee before the persecution started.

EARLY SIGNS

The absolute ‘Early Signs’ of a Great Nation’s intent is written in its defence posture which is its’ biggest spending. Japan attacked Pearl Harbor with a navy that it planned, built and trained on, spend a lot of money on, many years before. Looking at the Japanese Naval build up pre-WW2 any analysis would have seen its national ambition years before.

Smaller Nations are controlled by Great Nations via economic choke points. These geographical choke points controls the delivery and production of oil, and iron. Essentially, the Navies of Great Nations is the fuel of their money printing press.

MONEY PRESS

Relations between Great Nations are governed by gangster economics. You get countries ganging up to have trading blocks or as ‘Allies’ to fight other gangs. Whoever is the top gangster will always ‘borrow’ money from smaller Nations. A lot like schoolyard bullies borrowing money from their victims. As the leading Naval Power before WW2, Britain was operating its money printing press like there is no tomorrow. When Global Economic-Naval power flood the markets with its currency, it essentially ‘borrows’ from lesser nations who have to trade their goods for paper.

Japan wanted out of the system. Its Navy was planned decades before Pearl Harbor. Its reason was ‘why should I pay protection money to Britain to get Javanese oil, Australian Iron and Malaysian rubber ? I might as well build aircraft carriers myself and control the trade routes and production centres.’

When Japan invaded Singapore in 1942, it seize goods and services from the population via the printing press. When Japanese Soldiers come to your warehouse, they will buy your goods using ‘banana money’. Essentially, the Japanese army exchanges your goods for paper. Its is more efficient than outright seizure of goods as the population thinks that the Japanese Army will pay back in food when you exchange the ‘banana money’. Food was used as the economic choke point to fuel the printing press. This saved the Army huge resources as direct seizure of goods from the population would result in riots.

The Huge Naval build up by Japan before Pearl Harbor was because Japan was sick of accepting the British version of ‘banana money’ in order for Japan to get essential raw material.

THE COUNT DOWN

Now, you swap the actors. USA is printing money like no tomorrow. China is sick and tired of accepting ‘banana money’. China is planning a huge Armada. Unfortunately I live in one of the economic choke point that both countries will fight over. Its the Straits of Malacca.

USA will be stationing its littoral combat ship (LCS) here in Singapore. As for me, I am reading your blog like no tomorrow to gauge when China’s Armada would be ready.

I am not pro-USA or Anti-China. I just don’t want be in a economic choke point when the Great Armadas fight it out. More likely than not it will end up in a Nuclear exchange when one side is pressed to the corner. Unlike in WW2 Japan, both parties have ICBMs.

At this point of the Chinese build up, I don’t see a Pearl Harbor scenario for at least 5-7 years. I guess the countdown towards the ‘Pacific Smackdown’ starts when China deploys its fourth Aircraft carrier.

DEAR MR FENG

Please keep up your excellent blog and save the lives of people like me and my family. Will buy you a nice dinner at Changi Airport next time you are in Singapore.

@Ricardo Silva,As long as USA is around, it is not possible to resolve disputes peacefully among the Asians themselves. Arm racing in Asia is unavoidable with USA as the chef of pig’s breakfast in Asia.

China understands the concerns of its neighbours, therefore it proposed to shelve the disputes and co-develop the resources in the disputed areas, but USA is making sure such compromise never works; such proposal is fundamental against the survival of USA’s hegemony in Asia as well as around the world.

USA has been conducting a new Cold War against China long time ago if you care to compare the rhetoric in the western media between the eras they against USSR and what they have been saying against China.

The only way to resolve the disputes in Asia peacefully is to put a straitjacket on that predatory imperialist hegemon.

@py,I believe China can avoid the Japanese violent route and trade with rest of world without using USA’s ‘banana money’ one day. Of course USA would not let its ‘banana money’ becoming useless, it will use force to enforce everybody else to use its ‘banana money,’ that’s why China needs to have enough strength to defend itself against such violence.

@JohnWhile I agree that the U.S. policy in Asia isn't helping much to ease the tensions, I believe that the main issue with the South China Sea hasn't much to do with the american presence in the Pacific. The americans are engaged with defending Taiwan, Japan and South Korea, not the tiny islands to the south. I'll give you an example, Vietnam is hardly a friend of the U.S., in the seventies they fougth a war with China, and they had several naval clashes in the Paracel and Spratly. Since then (in reality, for centuries) they have been looking with fear to the chinese, and it's the russians that are supplying them with Su-30's, submarines and a lot of other gear. So, do you believe that it's the U.S. or Japan the responsible for the tension between China and Vietnam? Hardly. And what about India? It's another country that had no political or military ties with the U.S. (only now have they begun to buy american gear), and still, there are border skyrmishes going on with China for decades. And the Indians are looking at the Chinese in the Indian ocean with suspition. I believe that a country like China as the right to "fight" for it's sovereign rights, and if the U.S. can deploy anywhere in the world, so should another coutry, no matter which. But I aknowledge that China's neighbours are being threatened to comply with all China's wishes and that this is only making China look like the bad guy for the people in those countries. If you say that the western media is doing a bad job in the west by showing China to be the responsible for all the tension going on in Asia, I agree. But in Asia the western media has little influence over the public opinion of countries like Vietnam, Philippines,... What I say is, get on with the border demarcations, that's the big issue for those concerned (China and its neighbours), and chinese leaders can't think that by having a bigger military clout, can have it all. There are international laws that could and should by used to settle the diferences.

@Ricardo Silva,USA’s pivoting to Asia-Pacific with majority of its arm forces, with USA’s backing, Japan, South Korea, Philippines, Vietnam and India have been taken aggressive actions against China, and the joint military exercises between USA and those nations around China make your excuse for the USA rather hollow. USA is a predatory imperialist hegemony, and its actions demonstrate that. Japan, South Korean, Philippines, Vietnam and India will all benefit handsomely if they can help the USA to cripple China, it is simply in their national interest.

Actions speak louder than words; USA and its allies’ aggressiveness make China’s conciliatory approach looks silly, weak and ineffective to solve the problems peacefully. China must build up strength that can counter the might of the USA led gang in order to kill off their opportunistic adventurism, by then they will sit down to negotiate with China respectfully.

Jiang please settle down and take the advice of Feng seriously. There is indeed not enough women for men in China. I see that the testosterone is building up in the base of your brain and that your head is about to explode at any moment! We can help you! Give us your real name, d.o.b., address, and a bank routing number so that we can take up a collection to see if we can pay some woman to sleep with you. Please provide this information in haste, you are suffering greatly.

@Juan Gabiel Eclevia,Foul language will not win Philippines any point in international forum, and will not make Philippines win any contest against China. Poor behaviour will only reflect Philippines poorly internationally, and demonstrate Filipinos lack of wisdom to face challenges.

China needs to take the responsibility to protect South China Sea from destructive resource exploitation by the rogue states like Philippines and Vietnam. And it is wrong for Philippines to swing its big gun irresponsibly to harass harmless fishermen and unarmed Chinese civilian agency ships.

Cuba is about 95 miles from tip of Florida and Mexico is right next to Gulf of Mexico.Neither Cuba nor Mexico is drilling oil and natural gas in Gulf of Mexico.Canada is right to Gulf of Alaska.All U.S. neighbors (Mexico, Cuba and Canada) are not drilling in Gulf of Mexico and Gulf of Alaska.So much for 200 miles international water which Philippine is kept talking about.U.S. had also claimed Guam as it's own.Guam is more than 200 miles from U.S. mainland.All in all, Philippine is asking the biggest bully/offender of international 200 miles rule to help it to steal natural resources from China.That is a biggest joke I had ever heard.For U.S., if you are living in a glass house, don't throw stones.When admiral Dewey's naval fleet had defeated Spain and killed hundreds of thousands filippinos during battle for Philippine on the pretend to free Philippine from the tyranny of Spain.U.S. became the new master of Philippine.Philippine became U.S. colony instead of Spain colony.Philippine is trying so hard to bring it's former master back after Philippine had pushed U.S. out not to long ago.Separation Anxiety.

There is no money for U.S. to make to help Philippine right now.U.S. lost it's AAA credit rating.U.S. is running high national budget deficit.U.S. is having a high national unemployment rate.U.S. is trying hard to cut it's huge 750+ billions dollars national defense budget.U.S. is still trying to exit from two previous wars.U.S. is in an election year.Deploying several aircraft carriers in Asia costs hundreds of millions dollars and U.S. certainly do not has money to burn like before to keep the above face for too long.U.S. still owed about 1.1 trillions dollars to China.

I used to be a pacifist Chinese and believed that civilised parley was the way to go with negotiating. However, i found out what the internet was and after a few years of reading foreigner's opinions of China, I now believe that the only way to succeed in the world full of aggressive races is to be assertive and powerful. As for that Filipino, I so wish what he said came to being. China is itching to teach some of its noisy tiny neighbours a lesson in humility. I hate small dogs because they act exctly like Vietnam and Phillipines, shit and small, but thinks they're so fking good. I so wish my ancestor Zhang Jiuling convinced the emperor to exterminate the southern tribesmen. Who knew they would prove to be such annoying vermin 1300 years later. Seriously, now your place in the world and be thankful China isn't acting like the US, starting wars around the world and building military bases in foreign countries.